How to combine layoffs with an Agile transformation

Executive summary: You decide to take corrective actions in the form of layoffs and an Agile transformation initiative. This article shows you how to succeed with this combination.

Agile oils the innovation machine, enabling the delivery of complex products with increased value, speed and cost-efficiency [1]. It’s great, but what’s the impact on the head count? Will you need less people after the transformation? Would an Agile world need less developers, engineers and managers, after all?

Can Agile be used to reduce employment costs?

My short answer is yes, it can. You have to pay attention to two characteristics of Agile transformations, though:

A transformation probably won’t save your employees in the short term. The journey to agility is not a quick overnight trip. If you already see that layoff is inevitable, postponing it a few months to see the results of the agile transformation probably won’t save your employees. Transformations simply take more time.

Laying off people during or just after an agile transition may kill the agile initiative right away. Agility is a culture, based on transparency and trust. Layoffs easily damage trust, undermining the whole change initiative.

Just like business process improvements, Agile can be used as a sham for laying off people [2]. Throwing away all the potential benefits of an Agile organization for such a narrow range of improvement as simple cost reduction is an unwise thing to do.

How to combine layoffs with an Agile transition, then?

Pilot. Always start a transformation with a small scale pilot, in order to make sure that the transformation will really be able to help you, and to gather information for the next steps.

Estimate how long will it take to make the whole organization agile. For smaller companies putting high priority on their transition, it can take less than a year. For big software corporate, it can take up to 5 years [3]. The more distributed you are the more it takes. Software companies also tend to make the transition faster than hardware companies.

Lay them off. If you see (based on steps 1 and 2) that you won’t be able to survive without layoffs until the fruits of the agile transition grow ripe, start the layoff before you even mention the word “Agile”. Own your decision and be very transparent about the why’s. This will give you a head-start into the next step.

Start the transition and rally the remaining people around it. Show the remaining employees that you don’t think that laying off people is a solution by itself. Make it clear that you are aware that what got you here won’t get you there. Use the Agile initiative as a window to the future, giving hope to everybody involved. This will create a sense of “we’re transforming the way we work”, instead of the eerie feeling of “we’re at the beginning of the end”.

Will Agile decrease the number of jobs in tech?

I have been working with a company where 400 developers were working on a product that could have been developed by 60. They were struggling to find engineers to fuel their development efforts. Yet, even with the huge costs of employing 400 engineers, they have judged their program to be worth funding. This is not atypical, you can see this pattern in every industry. Innovation can give companies extreme benefits over their competitors, and executives are willing to invest huge amounts of money into the future.

Enter Agile. With less people creating more value for the business, the return on innovation and product development investments can be multiplied. If it is worth to invest in innovation now, it is very much worth to invest in it in an agile organization.

This is the reason why Agile won’t kill tech jobs in the long run. Instead, I expect Agile to speed up project delivery and technology development, thus contributing greatly to solving the great problems humanity will face in the coming decades. Besides making businesses more lucrative and work much more fun.

[1] Jeff Sutherland, Scrum: The Art of Doing Twice the Work in Half the Time, Random House Business Books, 2015; Link